Thank you, operator, and good afternoon, everyone, and welcome to MTG's interim report presentation for the Q4 and full year 2020. I'm Lars Torterson, I'm CFO at MTG. With me today, I have our Group President and CEO, Marja Reddin, we will begin presenting the quarter and then take your questions in a short Q and A session. Please keep in mind that only dialing participants can ask questions. With that said, I'm now handing over to you, Maria, to take us through the quarter.
Thank you, Lars, and welcome to everyone joining our conference call today. Before addressing the quarterly results for our 4th quarter and the full year 2020, I'd like to turn to our team members in the group. In mid February last year, new virus in South Asia rose to become a significant factor for the societies all around the world and companies as a part of those. We were, as most companies, certainly rocked when the pandemic hit, And I'm certainly very proud of how quickly we managed to regain our footings, thanks to the impressive and hard work from the whole group working as one team and how we ambitionally stayed on the course and delivered on our operations and our strategy for the rest of the year. It has truly been a dynamic year and a challenging one, but we're coming out of this stronger than we were 1 year ago.
With that said, I would like to take you through our presentation, So you can turn page. If we start to look at the highlights from the quarter. On a group level, we continue to show good operational performance and high ability as we report our final figures for the full year and Q4 2020. It has been a challenging but a transformative year for the company, and we're very happy to be able to conclude the year with a record high profit for the full year. On the Esports side, due to postponement for quarters earlier in the year.
The Q4 was an intense with 6 multi property events delivered by ESL Gaming, which together with good cost control resulted in a positive adjusted EBITDA. The gaming vertical delivered a robust quarter, rounding off a record year, and we made several strategic initiatives to both diversify and strengthening the portfolio, the transforming of a new gaming investment holding company and ownership increase in InuGain and the acquisition of Hutch and our most recent acquisition to the group. As we now progress into 2021, our strategy lies firm, and we are well positioned to continue to deliver on our buy and build strategy. If we then move into the Esports part. As we've said already in Q3, we consciously chose to postpone a number of multi properties events to our Q4 in order to mitigate the risk and give best chance for our market properties to host studio events with the teams present.
The quarter was indeed busy with a total of 6 market property events, which was delivered successfully as online productions. Among these were the ESL Pro League in October, IAM Beijing in November and the Dream Act Master Winter in December. Following our intense event schedule and the heavy weighting then of our events to the Q4, our organic net sales of owned and operated properties remained stable year over year, though with 2 more multi properties compared to last year and 2 less open. The Esports Services net sales decreased in the quarter by 42% due to less initiatives to multi publishers, a direct result from the ongoing pandemic. Still for us, the focus in ESS remains and it is to establish more strategic publisher relationship, And we have executed some important events on behalf of publishers such as Epic Games and Psyonix to highlight a few in the quarter.
To Also bring us some of the strong performance in the quarter. ESL Products stood out with a very strong engagement from our fans, resulting in several viewership records. Amongst other, the competition set a new all time peak of more than 500,000 concurrent viewers and the number of watched Ours rose to SEK 89,000,000 across both seasons, which is an increase of 129% compared to 2019. We're very happy to see the sustained strong support of the fans despite the pandemic circumstances and online forecast. DreamX Sports came through on and off the year with the execution of the Superliga finals.
We're also excited to see the continued interest from traditional sports leagues to complement the leagues with esports counterparts. Just yesterday, we announced the 4 year esports cooperation between DreamWalker Sport Games and the NHL. And earlier today, we entered into an agreement to produce the Swedish EL Svenska Football League. Travel and aviation restrictions in place to fight the coronavirus pandemic has meant that competition between teams based in U. S, Europe and Asia has been on hold for the vast majority of 2020.
We're therefore very happy to be able to in the Q4, we introduced cross Atlantic and multicontinent esports, although still in an online format, but it drives engagement. We also continue to see mobile e sport as a key growth area. In the quarter, ESL Gaming expanded very successful mobile open esports formats to all the cover in the Middle Eastern and African region. The extended ESL mobile open 2020 concluded with a year on year growth of 24% compared to 2019 with well over 1 point 5,000,000 players spelling out on titles such as F5 9, AutoShift, PUBG Mobile and Clans. During the quarter, we've also seen a very strong growth in active players and playtime for our B2C tournaments platform ESL Play as well as our Minecraft client's headline.
The ESL Play growth has primarily been driven by the PlayStation integration and the amateur tournaments in Titus such as FIFA 21 and NBA 2 ks 21, which was both released during the fall. Looking forward on the operation of our esports project going into 2021, visibility do remain decreased due to the pandemic circumstances that continue to have an impact despite promising developments on the rollout of vaccines. As a result, we've taken the decision for 2021 to host the majority of ESL and DreamWorks tournaments as in person competition but from in controlled studio environments. ESL Gaming has announced a busy first schedule for 2021 with digital and studio production. And while uncertainty remains due to this pandemic Under circumstances, we are scheduled to host several live audience events again in the second half of the year, which we look forward to.
Furthermore, we do expect that Smadem continues to impact our esports operations in cooperation with established and new commercial partners, so we're very focused on driving growth for 2021. While we continue to look forward to be able to host live events again, we're proud of how ESL Gaming has adapted to the new circumstances and continue to do so. As we speak, ESL Gaming is hosting the IUM Katowice as an all online digital format in both CS:GO, StarCraft 2 and with Warcraft 3 competitions. Is held now and runs until early March. So then moving on to the gaming vertical.
Our gaming vertical showed good progress in the quarter with Strong performance from InnoGames driven by Forge of Empires. We saw the commercial launch of Teenage Mutant Ninja Turtles by Kongregate and equally important, our new games pipeline to be launched in 20 2021 progressed according to plan. Inogen's performance in the quarter showed solid underlying growth, primarily driven by Forge of Empire on the back of several well to in game events and campaigns around the holiday season. In the quarter, browser overtook the lead driving growth over mobile for InnoGames. We see this as a temporary consequence from the pandemic impact, mirroring the changed behavior in light of recommendations to work from home across many markets.
That we're able to retain players despite changes in behaviors across platforms shows that in game types are great both on mobile and played on browser. Cornelia showed stable progress in the quarter, during which new title, Teenage Mutant Ninja Turtles was launched. Underlying net sales were decreased, however, due to the continuation of 2 third party publishing titles late in 2019. As for our gaming KPIs, ARP have showed year over year growth of 11%, driven by continued high engagements among our friends and thanks to already mentioned good in game campaigns by InnoGames. While the sequential decline in Arcta was more related to the number and the size of events held in Q3 versus Q4 versus Q3.
The Dow and Mau decreased compared to the same period last year due to Kongregate. There was adverse impact by the removal of 2 third party games. This effect was partially offset by the launch of 1st party title. In game, on the other hand, had decreased DAU supported by continued strong news acquisition momentum. As we touched upon in the previous quarter, we're excited about the new gaming verticals pipeline for 2021.
As of today, we have up to 3 new in the game titles planned for launched in different stages during 2021, with the first is being soft launch as we speak. Further, Kongregate and Hutch are, respectively, preparing launches of a new IP playing out in the popular SpongeBob SquarePants universe and the new exciting mobile racing title named Papa Health, respectively. Following the acquisition of Hutch in December, we initiated the onboarding, and we expect to see the to consolidate figures to be included in MTG's financial reporting starting January 2021 onwards. So moving on, the quarter saw a number of strategically important initiatives. On December 7, we announced that by utilizing our options in Innogyx, we increased our ownership by 17% up to 68%, further developing our relationship with the company.
As a part of the transaction, we also formed a new jointly owned holding company with InnoGames founders for current and future gaming investments. The cooperation between MTG and InnoGames has created considerable value for both parties over the years And that's a good example on how we want to partner with founders of Stellar Gaming and Esports Companies. We joined the vision for long term perspective. Following the formation of the Gaming Co, we acquired Hutch Games. And to finance the acquisition of Hutch, we also announced the rights issue, inviting all our shareholders to support our continued M and A agenda.
Looking forward, I can conclude that going to 2021, we have a more diversified portfolio of games and a very strong new games pipeline, which is progressing according to plan with several titles across different genres scheduled for soft and commercial launch later in the year. Innovations and Kongate with a range of established and proven IPs and prices ranging from city buildings and the ID categories now complemented by Hutt portfolio with titles in the earlier growth trajectory. And through the acquisition integration of Hutch, we do not only add strong titles and IPs, but also considerably diversify our gaming portfolio with the addition of the mobile racing at the Schanger. We begin 2021 with a number of sub launches backed by increased marketing. These new games are expected to start positively impacting our gaming vertical in the second half of twenty twenty one and more so in 2022 on back of successful launches.
So with that said, I hand over to you, Lars, to walk us through the financials.
Thanks, Maria. And as you have concluded already, overall a good year from an operation perspective despite the ongoing pandemic. As we have touched upon before, our verticals have experienced different realities. While gaming vertical has been operating from an elevated level, our Esports vertical has been adapting to a situation where offline events no longer is possible. Independently of specific circumstances, both verticals have delivered above our own expectations in Q4 and full year 2020.
With that said, let me go through the P and L in some detail. The export vertical had an intensive event schedule, driving a sequential recovery in the quarter. Compared to the same period last year, the underlying net sales was down by 13%, negatively impacted by mainly offline events moving online due to the pandemic. The gaming vertical grew underlying net sales by 4%, driven by InnoGames and a continued high engagement among the gamers and successful in game events throughout the quarter. Worth noting is that the amount of in game events for Innogent was slightly lower in Q4 compared to Q3 and is a result of seasonal phasing.
This in turn had a temporary adverse sequential impact on ARPAO in the quarter. Adjusted EBITDA grew by 130% year over year with an improved performance in both verticals combined with lower central costs. This was partly thanks to higher sales and more normalized marketing levels in the gaming vertical and partly due to the Esports verticals adjusted EBITDA improved significantly versus last year, thanks to more events held and more efficient operations on the back of online studio formats. In the wake of the ongoing pandemic, we continue to deliver on our savings target with more than SEK 240,000,000 in lowered cost in the quarter, primarily through additional COGS savings related to online events rather than offline events for our tournaments. But the improvement in adjusted EBITDA is not only about COGS savings, it's all about the it's also about the amount of master properties held in a specific quarter.
To be more nuanced, it should be noted that the intensity of the event schedule would also impact the performance of an individual quarter due to the fixed cost of the vertical. The second half of twenty twenty is a good example of that and the difference between a light event scheduled quarter, see Q3 and an intensive scheduled quarter see Q4 and what that means for operational leverage in the e sports vertical. With that said, the EBITDA adjustments in the quarter amounted to SEK 33,000,000 to be compared to minus to SEK 107,000,000 last year. And some of you might have noticed that the cost for long term incentive plan management incentive program was reversed in the quarter. This was the result of an end of year adjustment following the conclusion of the full year result gaming vertical in general and in the games in particular.
Also, M and A cost was impacted by the acquisition of Hutch included a stamp duty on the transaction. Depreciation and amortization in the 4th quarter amounted to minus SEK 68,000,000 and included amortization of PPA of SEK 24,000,000. Amortization of PPA was lower compared to last year, mainly related to the Kongregate acquisition, which is almost fully written down. Excluding PPA, depreciation and amortization decreased by SEK 9,000,000 mainly as an effect of larger write down in the gaming vertical in Q4 2019, resulting in a lower base. Net financial items amounted to SEK 51,000,000 mainly gains from financial assets, revaluation of the VC fund and unrealized exchange gains.
Worth noting once again is that revaluation of the VC fund helps in conjunction with new financial rounds being completed or if existing shareholders sell to new shareholders, indicating a higher or lower valuation. Finally, the group tax was minus SEK 77,000,000 predominantly reflecting the increased result in the gaming vertical and in games. Let's move on to the cash flow statement. On the back of the strong financial performance of the group, we reported an improved net cash flow from operations of SEK 54,000,000 driven by Innogames, but also thanks to improved operational performance in the Esports vertical on the back of the mentioned intensive event schedule. The relatively large delta in working capital between Q4 this of 2020 and 2019 was mainly due to a large tax payment related to InnoGames in Q4 2019.
Additionally, InnoGames received an early payment by 1 of the distribution platform owners, having a positive impact on working capital in the quarter. In the quarter, we closed the Hutch transaction that was financed through a combination of bridge facility amounting to SEK 1,800,000,000 cash and shares. Even though not part of the quarter, the takeout of the bridge was conducted through a rights issue that I would come back to on the next slide. Additionally, we invested SEK 17,000,000 in the VC fund and CapEx amounted to SEK 42,000,000 in the quarter, mainly related to the gaming vertical, but also small investments into our B2C offering in the e sport vertical. As a result, the net change in cash and cash equivalents from 4 continuing operations amounted to minus SEK 390,000,000.
That led to the group having a net cash position of SEK 1,200,000,000 as of Q4 2020. Gaming continues to be the cash flow contributing entity. Let's move on briefly to summarize the concluded rights issue. As part of financing the Hush transaction and increased ownership in InnoGames, MTG conducted a rights issue takeout in the Q1 of 2021. Following AGM, publication of prospectus trading updates and the mandatory investor interaction as part of the process, we could conclude a successful and significantly oversubscribed rights issue providing to deal with proceeds of more than SEK 2,500,000 before deduction of transaction costs.
As a result, we repaid on the 17th February the bridge facility of SEK 1,800,000,000. We are, of course, very pleased to have received such strong support from our shareholders in both the rights issue and for our strategy. That concludes my financial review. And any questions you might have, I will be happy to answer as part of the Q and A. Back to you, Maria, to go through.
Thank you, Lars. To summarize on the Q4, despite a very challenging year that has been 2020, With the uncertainty and the volatility created by the pandemic, I'm pleased to be able to say that we are stronger as a group today than going into the year. We delivered solid operational performance and high profitability, and we have a strong position to continue to deliver on the back of our strategy, developing what we have and remaining on the outlook for the relevant and attractive M and A targets for 2021. Despite the ongoing rollout of vaccines bringing hope of normalization for societies and industries, we expect that the pandemic will continue to impact our esports business also in 2021. The pandemic circumstances continue to mean low visibility and increased uncertainty.
But with that said, we do look forward to reintroducing studio events in the first half of the year and hopefully also host live audience events in the second half of the year in 2021 once more. In the meantime, we've proven that our Esports vertical can produce and distribute world class digital only events and create attractive audience and content for our fans and our commercial partners. The forming of our new gaming co and the addition of Hutch also means that our gaming vertical stands stronger, more diverse and with a broader range of IPs and titles spanning more genres and growth stages. With the right issue we concluded, we also enabled, through the support of our shareholders to continue to deliver on our strategy and maintain the high focus on M and A activities from 2020. So with that, we close in 2020.
And I thank you very much and hand over to you, Lars.
Thank you, Maria. That concludes the formal presentation of our Q4 and full year report. We are now ready to take any questions that you might have on the report or the corporate score presentation. So operator, if you can help us to gather the first question, please.
Thank you very much, sir. Ladies and gentlemen, we will now begin the question and answer session. Your first question comes from the line of Tom Singlehurst of Citi. Please go ahead. Your line is open.
Hey, Maria. Hey, Lars. Thank you for taking the question. Tom Zinglehurst here from Citi. A couple, if it's okay.
Maybe just starting with sort of broad outlook and Shape of the year, I mean, I'm conscious you haven't committed to any sort of firm targets in terms of growth or Profitability. But I suppose just building on your comments about gaming, you mentioned you anticipate the contribution from launches in the second half and running into 2022. Obviously, on the esports side, you're also talking about physical events coming back in the second half. Should we anticipate the first half is still seeing revenue pressure across the whole group? So yes, if you can maybe sort of comment on the aggregate outlook, if you can, and the phasing of growth 1H, 2H, That was the first question.
Maybe if you start there, and I'll kick in with a follow-up, if that's okay.
Thanks, Tom, for the question. So as you concluded yourself, we don't provide any formal guidance. But I will hand over to Maria to elaborate on your questions. So please, Maria, if you could as Tom said? Yes.
Hi, Tom, and thank you for your question. I think what we have said and what What we don't want to do is provide guidance. But of course, I mean, what we want to do and when we look at the full year 2021, our focus is to drive growth. And we want to drive growth both organic and inorganic. And that's the strategy we set first.
And if you look at on the organic side, I mean, we're very excited with the game launches that we're having coming up. I mean 5 on the gaming side, 3 in Inno, 1 in Hutch and 1 in Kongregate. That will, to your point, drive marketing investments. We are starting with the first half launch as we speak and then they will gradually roll out now predominantly in the first half. But that also means, of course, that the revenue buildup of these new titles will come in the second half of the year and predominantly into 2022.
And then It is important to remember, we said that also in last year Q2 that, of course, we did see on the gaming side significant increased activity levels. And that was predominantly coming from New registration, I'm back on the increased marketing activities that we can do, given the high raw levels that we enjoyed during Q2 and also reactivations And that's something you should bear into mind when you look at the gaming quarters and the seasonality effects. And for the esports, Yes, visibility is unfortunately low. We would have hoped that the vaccine rollout would have gone faster, but we are where we are. On the good note, I think that with ESL and Dream Act, we've managed to entertain our fans and the community in a very strong way in online format.
We believe that we can reintroduce studio formats now in the first half of the year and then hopefully progressing into live audience events in the second half of the year. And one thing to bear in mind as well is that when you look at the year over year comps for Q1, last year, we actually managed to execute most of our events. It was actually about this time last year when we had to execute the Katowice events without an audience. So that is something to bear in mind. That our focus remains very clear on driving growth for the full year 2021, both organic and then to add further acquisitions, I guess.
Perfect. And a couple of follow ups, 1 on eSports and 1 on Gaming. On eSports, The question is around digital and hybrid. I mean, actually, the Q4 owned and operated performance is I mean, that's Stable year on year is absolutely fantastic if we think about the pandemic. I suppose the question is, When things do get back to normal, is there more of a demand for Studio based events and sort of digital only formats?
Or is there a sort of hybrid model that net net will end up being additive? That's the question on the e sports side. And then on the gaming side, I mean, obviously, you talked about the organic launch, but it feels like M and A is going to be an ongoing part of the story. The question is you've got obviously the sort of combined holding company in gaming, which is great. I'm just interested on whether the InnoGames minorities have a blocking stake when it comes to doing more deals and how from a mechanical How deal flow works with, as I say, the InnoGames minority in place?
Thank you.
Thanks, Tom. So as I understand the question, it's When it comes to e sport also, if the online format is going to survive, return to normality, meaning that there would be a hybrid between online and offline events also when things are hopefully back to normal. And the second one was around gaming and the dynamics in the gaming holding company between us and our partners in the Innovative Minorities and how we discuss deal and deal flows. But these are two questions for you, Maria.
Yes. Thank you. Let's start on the Esports side. And I sincerely hope that the online Continue also in the world that normalizes. I think that we have learned a lot this last year.
And we also shown both to ourselves and to the market that we can actually entertain in a really good and relevant way through these formats. At the same time, there is both for the fans and for the players And also for the band partners, it's also important to go back to the physical events within state and marinas. But I think that in the combination, we can do A whole lot more compared to what we've done before. So that brings back a little bit to the point when I said that we've done stronger today. I think that we learned a lot how we can improve our operating model, how we can Scale is better.
And I think also to add to that, which I think is extremely interesting to see and that has actually accelerated also during the last sort of 12 months is to see the growth of interest in high mobile esports, which I think is super interesting and what we can do more there and also on the B2C side. So So I believe there are many great opportunities to bring with us learnings and be better going forward, and that's what we focus on. And also to touch a little bit because you also touched upon Q4 as well and that we actually have a profitable quarter, which is great. But also remember that the weighting of events was very much skewed to Q4, given that we had 6 monster events and it is predominant back on the monster events that we monetized. And hence also the proportionate amount of revenues was also skewed in the same way to Q4.
So that, of course, helped drive our gross margin and also the EBITDA level for these 4. Then moving on to your question on the gaming side. I don't want to go into details with a specific agreement with InnoGames. But I think how I generally look at it, we have a strategy on the gaming vertical and what kind of companies we would like to buy. We are completely aligned with our board and our minority owners in the gaming vertical on what that is.
And should it so be that Season gaming executives don't find companies being good, then they probably are not good. So I think that we are having a very constructive discussion with on that respect, and I see no reason why that should not continue. And we are very focused on driving our M and A agenda and to look at potential targets both within esports and games.
And just for clarity there, Tom, is the company that the minorities are represented by them. So you follow the abbreviations.
Perfect. Thank you.
Thank you, Tom. So operator, can we have the next question, please?
Of course. Your next question comes from the line of Erik Lindholm of Nordea.
Yes. Hi, Maribel. A couple of questions here for me. So starting off, can you talk a bit about what you are seeing here at the start of Q1 perhaps for gaming? So some companies have witnessed the kind of challenging user acquisition environment in Q4 that improved in Q1.
Is this something you have seen as well on front there?
Hi, Erik. Good question. It's always marketing is an important factor of the gaming industry. So I don't know how much we can share there, Maria, when it comes to how Q1 has been or compared to Q4. Please?
Are you referencing on the UA and our ability to spend on the UA side, Erik?
Yes, yes. Exactly.
No, but for us and I think it also becomes a bit company specific because you're addressing a little bit different targets. But if you lift the perspective of totality, I think that they are starting in line with our expectations when it comes to how much we're going to spend on UA and the sort of return we're seeing on that UA level. So there's nothing that I want to flag specifically on that.
All right. Great. And looking at this discontinuation of the 3rd party publishing contract in gaming, which I guess is to Hyper Hippo. Is it possible to give an estimate of how big the headwind was here in Q4 from this continuation?
Yes. No, I mean, it has been said now for a few quarters, to be honest. But that has been phased out now to it's almost entirely. And to be honest, it has the impact of the top line, Congolese, but it had very little impact on the bottom line performance. So we have not gone out and said any specific.
But most importantly is that you see a good underlying trend in the company. The transformation has gone through. We're on the right projection, focusing on our first party games, And we're now looking forward on building the Teenage Mutant Ninja Turtles game. So we put the market in Q4. And then we are bringing the game on back of the Spongebob universe into the market in the first half of the year.
So that's what we're focusing now going forward on.
All right. And the final one from you here. Can you talk a bit about the outlook for Esports Services here in 2021? So I noticed that you expanded the Nissan contract to Hearthstone and sign some more contracts in Drismax Sports Games, for example.
The Esports services then and how that is going to develop going into 2021, Maria?
No, I think that we are Extremely excited about all those three deals that we have now announced. And I think we have even though our main focus lies in owned and operated because that we can drive scalable operations, And this strategic partnership on the HLS side is something we really want to continue to drive. And I'm hoping that we can bring more partners on board and together develop esports and build great esports stories on them. So I'm hoping that we will continue to do this and it lies within our focus. And I think we're on to a very good start.
And especially, I would say and highlight the NHL and the EL sponsor we announced yesterday and today because that also marks a new beginning that you have in the traditional sports franchises moving into Esports. And I believe and I hope that, that is something we continue to see more of.
And it's Hot off the press, of course, if you didn't notice it yesterday, we did then secure a 4 year agreement with the NHL. As Maria is saying, it's also a very, very strong brand that can help propel the whole sport games franchise as well for DreamHack. Did you have any more questions?
No, that was it for me. Thank you so much.
Thank you, Erik. Appreciate it.
Thank you.
I'm sorry, sir. No further question at this time. And we do not have any further questions, sir.
That is very much all right as we did have a trading update a month ago or so. But Thank you, operator. And for everyone joining today, that concludes the conference call for MTG's 4th quarter full year 2020 interim report. We appreciate you taking the time today to join the call, and we look forward to stay in touch until we release the next quarterly report, which will be the Q1 2021 on April 29. So thank you very much.
Take care and stay healthy.